Adhere to the principle of market pricing and speed up the improvement of the futures market of agricultural products

Cheng Guoqiang, a researcher at the Development Research Center of the State Council, said at the "2014 Zhengzhou Agricultural Products (Cotton) Futures Forum" held by Zheng Shang Institute on the 18th that a series of new problems and new contradictions in the temporary storage policy of agricultural products have gradually emerged, especially in the new situation of important changes in the domestic and international environment.

The reporter learned that during the 10 years when China implemented the minimum purchase price and temporary storage policy, the cumulative increases of early indica rice, medium indica rice and late indica rice reached 92.9%, 91.7% and 106.7% respectively. Since October 2011, cotton domestic prices have been higher than import duty-paid prices, with a price difference of 3,000 - 6,000 yuan/ton.

With the support of minimum purchase price and temporary reserve policy, the prices of major agricultural products such as rice, wheat, corn, soybean and cotton in China are higher than those in the international market. The prices of raw materials and finished products of agricultural products are upside down, rice is strong and rice is weak, wheat is strong and flour is weak, cotton is strong and yarn is weak, and some industries even suffer overall losses. The shortcomings of this mechanism are gradually emerging. "With the expansion of the price difference with the international market, while the domestic market is subject to fluctuations, the inventory cost of collecting, storing and processing enterprises has also increased significantly." Cotton spinning enterprises attending the meeting told reporters.

"The current cotton market should adhere to the principle of market pricing, improve the price formation mechanism, let the market determine prices, minimize policy intervention and distortion, and prevent policy implementation from evolving from production support to income support, that is, from linked subsidies to decoupled subsidies." We must ensure that whoever plants will make up for whom, that there are many kinds of supplements, and that there is no supplement for no planting, so as to ensure the enthusiasm of growers." Cheng Guoqiang said.

Cheng Guoqiang introduced that the principle of the reform of the target price system for agricultural products is to take marketization as the guidance, adhere to market pricing, minimize intervention and distortion in the market, and effectively play the decisive role of market allocation of resources and regulation of supply and demand and prices of agricultural products. For key products and key areas, explore the establishment of direct subsidy mechanisms linked to output and planting area, and price adjustment mechanisms with relatively little market distortion.

Cheng Guoqiang said that the reform of the agricultural product price formation mechanism will develop in three aspects. First, improve the minimum purchase price policy for wheat and rice. The distortion effect of minimum purchase price policy can be reduced by locking the minimum purchase price level, implementing multi-subject quantitative purchase, strict policy start-up and withdrawal mechanism, etc. In the future, when conditions are ripe, target price subsidies will gradually replace the minimum purchase price policy. Second, timely withdrawal from temporary storage. After gaining experience in the pilot of target price subsidies for soybeans and cotton, the target price system will be gradually implemented for important agricultural products such as corn, rapeseed and sugar. Third, eliminate the system that affects the development of agricultural product market system, accelerate the establishment and improvement of risk management tools such as agricultural product futures.

Cheng Guoqiang believes that from the perspective of policy operation, the target price is different from the minimum purchase price and temporary storage price, which does not directly affect the market price, but mainly plays a guiding role in price signals. When the market price of agricultural products is lower than the target price, farmers are still free to sell according to the market price, and the difference between the two is subsidized by the government according to their planting area and average yield. In this way, farmers 'enthusiasm for production can be mobilized, the basic income of producers can be effectively guaranteed, and the market can play an important role in regulating the supply and demand of agricultural products, reducing market distortion and curbing the excessive exploitation of agricultural resources. At the same time, it can also mobilize the enthusiasm of various market entities and reduce the pressure of government collection and storage.